Bilski Decision Shows The Tension Between Fostering Innovation And Restraining Business Method Patents

by Orlando Lopez

June 28th, 2010

Today, the US Supreme Court rendered its long awaited decision in Bilski v. Kappos. The tension between fostering innovation and restraining business method patents, which is apparent during the oral argument, surfaces again in the opinion. The entire Court agreed that the machine or transformation test, which could hinder innovation, was not the sole test for patentability but only a clue to patentability. This returns the patentability question to the decisions of the court in Benson, Flook and Diehr (as suggested, among others, by the LegalOn-Ramp Amicus Brief, in which I was a co-author). Repealing the machine or transformation test, although a victory for fostering innovation, introduces uncertainty in the determination of patentability since the Benson, Flook and Diehr provide guidelines but not definite tests.

The majority opted for not restricting business method patents. The one clear mandate of today’s opinion is that business methods are patentable. The minority, Stevens, Breyer, Ginsburg and Sotomayor, make a case for the fact that business methods are not patentable. (The more restrictive case, that some business methods are not patentable was argued in the Legal On-Ramp Amicus Brief. The minority position was argued in the Free Software Foundation Amicus Brief.). This strong dissent foretells the possible return of this issue to the Court.

The majority opinion utilizes one of the exceptions to patentable subject matter, the un- patentability of abstract ideas, in order to declare Bilski’s claims not patentable. But, as a minority points out, the Supreme Court has not provided a clear definition of what constitutes an unpatentable abstract idea. Neither have the lower courts. So today’s decision leaves patent practitioners with the same uncertainty as to how to determine whether a method of claim covers the use of an unpatentable abstract idea in an unpatentable way.

Overall, the Supreme Court’s Bilski decision places the issue of patentability of method claims back in the same place it was before the Federal Circuit decision.